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I Know What My Bankruptcy Trustee Does, But How about the U. S. Trustee?

What does the U.S Trustee Do?

If you are about to file a Chapter 7 or Chapter 13 case, you’ve heard who your trustee is what he or she does.

In a Chapter 7 case, your bankruptcy trustee looks over your paperwork and talks with you for a few minutes at the “meeting of creditors,” primarily to determine if you own anything that is not “exempt” so that you have to surrender it to your creditors.

In a Chapter 13 case, your trustee verifies that the Plan we file meets legal requirements and tells the court if it appears not to. After that this trustee gets your monthly Plan payments and distributes them to your creditors.

The “Office of the United States Trustee” is something altogether different. It mostly works in the background, but in a rare case it can cause you problems. So it’s worth knowing what it does.

The U. S. Trustee (UST) is part of the U.S. Department of Justice, and has two primary tasks including:

  1. Helps the Bankruptcy Court administer bankruptcy cases, and
  2. Enforces bankruptcy law.

In its administrative role, the UST appoints and supervises the Chapter 7 and Chapter 13 trustees.

It oversees bankruptcy cases for administrative efficiency, and reviews and can object to fees charged by attorneys and other professionals.

In its enforcement role, the UST can get involved in two primary ways:

  1. In a Chapter 7 case, object to you being in Chapter 7 and so try to “convert” your case into a Chapter 13 one; and
  2. Accuse you of giving inaccurate information on your bankruptcy documents or while under oath during your hearing with the trustee.

As nasty as these sound, most of the time staying clear of the UST’s enforcement arm is not that hard. Just do the following:

First, as for avoiding your Chapter 7 cases being challenged as not belonging under Chapter 7, this is mostly a matter of meeting the “means test,” a potentially complex set of income and expense disclosures.

Avoid this kind of challenge by the U. S. Trustee by working closely with your attorney before your case is filed to make sure the means test disclosures are presented accurately and that you clearly meet this test.

And second, as far as avoiding allegations of accuracy, again it’s a matter of appropriate preparation. Diligently provide your attorney with the paperwork and information needed so that all of the documents are accurate and complete.

If after all this you and your attorney still hear from the UST, most of the time the concern can be resolved favorably.

What’s crucial is to address and respond quickly to any contact from the UST, because it is dealing with some immediate legal deadlines and so will be compelled to get aggressive fast if doesn’t get fast cooperation.

You and your attorney share the goal of having your bankruptcy case go as smoothly as possible. So treat issues involving the UST carefully before filing bankruptcy, and respond right away if they do contact you during your case.

 

[Photo credit: www.flickr.com/photos/nina_pix]